NEW ORLEANS -- The state of Louisiana welcomed homeowners to 2014 with a new round of letters asking them to return portions of Road Home grants they received six and seven years ago.
In some cases, the letters are baffling; going to homeowners who completed all of their rebuilding work and followed all of the rules, or even to people who sold their property to the Road Home and should have been done with the whole deal.
The letters have been pouring into mailboxes around the state for the last half year, and many homeowners have felt helpless in the face of what the former chairman of state housing recovery, Walter Leger, called “the potentially awesome power of the state.”
But now, they have an elected official who is calling attention to their plight and calling for state legislative hearings in the next two weeks to address the heavy-handedness of the letters.
“They’ve sent in the notifications, they’ve sent back the information, they’ve checked the box that they don’t agree (that they were overpaid), but it’s not getting resolved, so they are really in a high state of anxiety,” said LaToya Cantrell, New Orleans’ District B councilwoman and a recipient of four collection letters from Road Home.
“Enough is enough,” Cantrell added. “Let’s get the facts straight. Let’s go after the folks we know have not rebuilt their homes, let’s help the city of New Orleans with the problem that the state has really helped create.”
Perhaps most surprising is the letter Linda Schirer got on Jan. 2, addressed to a property in the West End section of Lakeview. It, and at least one previous collection notice, was sent to the property she sold to the state’s Road Home Corp. six years ago.
It’s a property that the state demolished, sold at a loss to a developer and which was sold again last year, to a family that built a brand new house on it.
And yet Road Home still tried to reach Schirer there, to tell her that she got additional insurance proceeds after the sale and thus owed the state back $18,000.
First off, she said she got no additional insurance proceeds after the sale. She said it should be irrelevant, however, because a sale is final and can’t be renegotiated six years later.
“If they have a right to change a contract, then I want my property back!” Schirer said, getting agitated as she stood in front of the property for the first time in years, seeing the new house built there for the first time. “I’ll give them (back) what they gave us, (but) I want the property back. It’s too bad there’s a house. I’ll take the house with it!”
While Schirer’s is an extreme case, others, such as Metairie retiree Ed Vidacovich, appear to have more typical but equally confounding issues.
Vidacovich got a letter demanding he pay back $16,000 out of the measly $29,000 he got from Road Home to rebuild. He said he made do with the 2007 grant even though he had to borrow additional money to complete his repairs.
Now, all these years later, the state claims he got additional insurance proceeds after his closing. The documents show that he got $60,000 from insurance but only $44,000 was counted against his grant award. The thing is, Vidacovich kept all his records and they clearly show that the Road Home had the $60,000 figure well before his grant closing and chose to deduct the $16,000 on its own.
“They say, ‘Come in,’ and ‘Sign here,’ and ‘This is what you’re gonna get,’ and they didn’t show me how it was calculated that I can remember,” Vidacovich said, thinking back to the day he signed his grant papers. “And if they did, I wouldn’t have known the depreciation amount, or the breakdown of these figures, or how Allstate figured it. It was just, I just wanted to get out of there and get over with this hurricane.”
Vidacovich gets mad when he thinks about ICF International, the Virginia company that was paid $900 million to administer the Road Home. It hired subcontractors to calculate and verify grants, and if they had all of the insurance proceeds in hand before Vidacovich’s closing, why is the state coming back on him seven years later, after he’s spent all the money to fix his house?
“They paid this company to do all this paperwork and figure and stuff and they make the mistake and we have to be the sitting ducks who are targeted? It’s wrong. It’s all wrong,” Vidacovich said.
State spokesman Doug Baker said the state has found ICF at fault for $77.8 million in overpayments on 1,915 files. That’s about 1.5 percent of all Road Home grants.
“I think the first overpayment was to ICF,” Cantrell said. “That was the first overpayment that in my opinion is no way justified. So if we want to make it right, go back to ICF and tell them, ‘We overpaid you.’”
To be sure, many of the homeowners receiving the repayment letters failed to comply fully with grant requirements. For instance, hundreds of letters have gone to people who got up to $30,000 to elevate their homes but never finished that lifting work. They argue that the “elevation incentive” doesn’t really force them to lift their homes, but the state and the federal Department of Housing and Urban Development consider it a misuse of federal funds if the elevation work was not properly completed.
Other Road Home participants haven’t fully complied because they lost some or all of their grants to contractor fraud or the money went to pay off mortgages under duress, rather than for repairs.
The state has implemented a new program to try to back-fill some of those grants, to get those homeowners over the rebuilding hump.
In most of these cases, however, homeowners feel they are being unfairly picked on because they are easy to find and responsive, unlike others who got the grants, never rebuilt and cannot be found.
“And what gets me is the fact that some of these guys that got their grant money, bought Cadillacs or whatever and took off to Texas, Arkansas or wherever, and they may be in the same situation, but they can’t find them, so they’re off scott free,” Vidacovich said.
Baker, the state spokesman, said more is being done to go after those who took grant money and ran. He said the state sent letters starting Jan. 6 to anyone who did not respond by Nov. 25 to the state’s request for proof of compliance with rebuilding covenants. The recipients will have 30 days to respond. If they don’t, they will get a second letter giving them 15 more days to respond. And if they don’t respond to the second notice, they will start getting collection letters, too.
The fact that more aggressive collection efforts have already begun with people who actually responded and complied irks Vidacovich.
“I was only too happy to stay in my house and agree to help rebuild the state,” Vidacovich added, getting choked up. “But I should have gone too with the rest of them because now I’m being targeted like a sitting duck for money I didn’t know… it was their mistake.”
Cantrell, meanwhile, is pushing for changes. She says state Rep. Neil Abramson, D-New Orleans, has agreed to host a meeting at New Orleans City Hall within the next two weeks and invite state Office of Community Development staff to attend with laptops so they can help homeowners deal with the letters in person, on the spot.
But she also said she doesn’t trust the state to keep administering the program in a fair way. She wants to see any leftover funds redirected to New Orleans and other local governments so they can run their own blight-eradication programs.
She said the Road Home’s inequitable grant calculation method, which based most grants on the home’s pre-storm value rather than the actual cost of rebuilding, is a key contributor to the city’s blight problem, especially in the traditionally black neighborhoods that had historically lower property values than their mostly white counterparts.
“Working with the state I don’t see us making any real improvement on the ground in our neighborhoods at this point,” she said, adding that she trusts the city more because “I trust that I will ensure that we will do the right thing.”
WWL-TV heard from some homeowners who said they believed the state was wrong, but they agreed to pay them anyway because they were tired of fighting. Vidacovich and Schirer both said that would be a mistake.
“The government has enough control over people: They don’t have to come and intimidate you for things that they did, (that) you didn’t even know about,” Vidacovich said.
“Paying Road Home right now would be like blackmail. You’re paying a blackmailer,” Schirer said. “Once you make the first payment, how do we know they’re not going to come back on us again? They took six years this time, so they could call back next year and say we owe them another $18,000.”